Michigan governor open to drivers forgoing unlimited benefit

Michigan Gov. Gretchen Whitmer meets with Angela, right, at the Hope Network Neuro Rehabilitation campus Thursday, May 16, 2019, in East Lansing, Mich. Angela sustained a severe brain injury last August when a vehicle struck her while she was riding a bike. The Legislature is considering whether to end Michigan's unique requirement that drivers have unlimited medical benefits through their auto insurance policies. (AP Photo/David Eggert)

EAST LANSING, Mich. (AP) — Michigan Gov. Gretchen Whitmer said Thursday that she was open to letting drivers forgo mandatory, unlimited medical benefits covered by their auto insurance premiums, but only if they were still required to buy some level of coverage.

The Democrat's position, which she announced after touring a rehabilitation facility for motorists and others with brain injuries, was seen as a potentially significant development as the Republican-led Legislature considers bills that would cut the country's highest car insurance rates. GOP leaders reported "productive" conversations with the Whitmer administration and decided not to send her legislation she had threatened to veto.

Michigan is the only state to require unlimited personal injury protection, or PIP, benefits — which on average make up half of auto premiums. Under differing measures that won quick approval in the state House and Senate last week, motorists could choose zero PIP coverage or higher levels as long as they have regular health insurance.

Whitmer said she must "draw a line" against offering a no-PIP option, calling it the "biggest, most glaring problem" in the legislation, though she said requiring drivers to have at least $250,000 in coverage is "worth consideration."

"People don't think it'll ever happen to them," Whitmer said of the potential for sustaining serious injuries in a car accident. "That's why we've got to have a base level that everyone buys into so that we can get the savings that we want but also protect the system."

Whitmer warned that a full opt-out could "bankrupt" people with severe crash injuries, shift costs to the government-funded Medicaid system, and undermine hospital trauma centers and rehab clinics "that are doing the critical work of helping people become independent again and get their lives back."

Senate Majority Leader Mike Shirkey, a Clarklake Republican, said Whitmer is "moving in the right direction," though he still supports allowing drivers to fully waive PIP benefits to save the most money.

"For the first time, I've seen some movement toward PIP choice," he said, adding that Whitmer appeared open to also limiting how much car insurers pay providers for care.

Unlike several other no-fault states, Michigan does not have a fee schedule for medical treatment covered by auto insurers, so they reimburse much more for the same services than is paid by employer plans or government insurance such as Medicare or Medicaid. The legislation would cap reimbursements at workers' compensation levels, which critics say is too low and would make it difficult for accident victims to find hospitals or doctors able to provide them care.

A University of Michigan study released last month found that car insurance on average is "unaffordable" in 97% of Michigan's ZIP codes, based on the U.S. Treasury Department's Federal Insurance Office deeming auto insurance as unaffordable if premiums exceed 2% of a ZIP code's median household income.

The average premium in Michigan — $2,693, according to the most recent report from The Zebra, an insurance comparison website — is 83% higher than the national average of $1,470. Detroit's premium on average is $5,464, far surpassing any other U.S. city.

Under the House and Senate bills, people opting out of unlimited medical coverage would not have to pay much of what will soon be a $220 annual per-vehicle fee that reimburses auto insurers for expenses surpassing $580,000 for the severely injured. The House plan would also require specific PIP rate reductions of between 10% and 100%, for five years, depending on the coverage level chosen.

House Democrats — who cast the GOP-passed bills as a giveaway to the insurance industry — unveiled their own plan Thursday. It would require insurers to reduce premiums by 40% overall and make changes such as prohibiting the use of non-driving factors such as ZIP codes to set rates, which Democrats say is discriminatory. Senior motorists could decline PIP coverage if they had a gap policy to cover long-term care that generally would not be picked up by basic health plans.

House Minority Leader Christine Greig, a Farmington Hills Democrat, said she preferred "no limits" on health care benefits but negotiations were ongoing.